Getbucks seeks US$5m for capital requirements

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GETBUCKS Microfinance Bank says it is engaged in negotiations to raise US$5 million the lender requires to meet the Reserve Bank of Zimbabwe (RBZ) minimum regulatory capital requirements.

 Dr Rungamo Mbire, the bank’s chairman, said the capital would ensure compliance with the regulatory capital threshold deadline, which was extended to December 31, 2023, from the initial December 2020 timeline.

According to the Reserve Bank of Zimbabwe, micro-finance institutions should have a minimum capital requirement of US$5 million.

 Dr Mbire said the bank’s net equity position was $1,534 billion as at 31 December 2022 hence the Bank is working on a recapitalisation plan.

 “The anticipated capital raise will help the Microfinance Bank address the regulatory minimum capital requirement of US$5 million equivalent.

 “The raised capital will reduce the microfinance bank’s cost of funding, as well as capacitating the microfinance bank’s expansion drive,” said Dr Mbire.

 He said trading in the US ensures a significant degree of certainty in planning and operations; however, the local currency continues to be pummeled by both inflation and exchange loss against all the major currencies.

 “These vices necessitate that the microfinance bank continues to implement capital preservation initiatives to preserve shareholder value,” he said.

 For the year under review, the microfinance bank recorded a profit before tax of $136,2 million representing a 186 percent increase from prior year inflation adjusted profit of $47,6 million.

 Operating expenses increased by 19 percent during the year under review from $1,372 billion in 2021 to $1,64 billion in 2022.

 “The increase was lower than the average inflation for the year under review as the Microfinance Bank embarked on a cost-cutting drive while operating in an inflationary environment,” said Dr Mbire.

 Borrowings increased from $976 million to $1,404 billion as the microfinance bank managed to mobilise new lines of credit.

 Customer deposits increased 132 percent to close at $631 million from $272 million in 2021 and the increase is attributable to the increased use of the USD in the economy.

 Dr Mbire said the Microfinance Bank is now issuing loans in US dollar and deposits in this currency tend to stick a bit longer.

 “There, however, still exists a general market’s reluctance to hold on to monetary assets especially in ZWL (Zimbabwe dollars) considering the inflationary pressure and fear of real monetary loss due to currency depreciation,” he said.

 The microfinance bank’s loan book for the year under review increased by 147 percent, growing from $617 million in 2021 to close at $1,526 billion in 2022.

 In terms of the financial position, the Microfinance Bank grew its total assets by 19 percent, from $3,482 billion to $4,145 billion, the growth in the assets is mainly attributed to the increase in the loan book.

 Dr Mbire said Getbucks was able to access US dollar credit lines and extend these to its customer base.

 As at 31 December 2022, the Microfinance Bank had foreign currency-denominated commitments of $1,330 billion.